C150402 CT2015-090 Feasibility Study

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The Company assessments have been kept fairly constant over the past ten years, gradually building the Company's ability to sustain regular maintenance expenses and to anticipate the loan financing of these critical improvements. CREDIT WORTHINESS The Company has a long term relationship with Community Banks of Colorado, and has the ability to borrow money as required to conduct its normal business. The long history of this company in the community and its excellent reputation contribute to the positive credit worthiness of the Company. ALTERNATIVE FINANCING CONSIDERATIONS The Company has investigated alternative financing with its own bank, Community Banks of Colorado. Although the bank indicated it would consider a loan application, the requirements for collateral, the high interest rates, and the availability of the more favorable terms of the CWCB Water Project Loan program, the Board determined that it was not feasible to pursue such a commercial loan. All stockholders of the Ephraim Ditch Company have felt the effects of a poor economy, extended drought conditions, and the high cost of "lost" water due to the deteriorated condition of their diversion. These constraints contribute to the Company's determination to avoid the high interest rates offered by commercial banks. OPINION OF FEASIBILITY Willingness to raise assessments: With unanimous votes of approval from all stockholders, combined with the collaborative support of neighboring Sanford Canal Company's similar decision, and bolstered by the District and by a partnership with East Bend Ditch, this project has a high expectation of success. The WSRA grant proposal was unanimously approved by the Rio Grande Basin Roundtable (RGBRT) on August 13, 2013. The RGBRT suggested that Sanford Canal Company and Ephraim Ditch Company should pursue obtaining a CWCB loan in order to balance the in-kind commitment being offered by East Bend Ditch Company and the Conejos Water Conservancy District. This request therefore constitutes a unified commitment to implement and extend the District's Whole River Strategy to a combined additional 8,000 irrigated acres at The Confluence of the Conejos River. The Rio Grande Basin has met two times to review the details and determine the feasibility of this project, and they have unanimously determined that the project should be funded. There do not appear to be any significant roadblocks which would keep the Ephraim Ditch Company from successfully completing this project. Recognized Multiple Benefits: This project establishes the infrastructure, the technology and the management practices whereby the Company can more equitably deliver water to all of its shareholders. An additional benefit is securing the safety of the system against failure of a 17 IPrepared by the Conejos Water Conservancy District, P.O. Box 550, Manassa,CO 81141 Per contract: Nicole V.Langley,Transforma Research&Design(www.transformagrants.com)